When not to have comprehensive car insurance

Busy traffic in a city centre

When we own a car we are legally obliged to have car insurance. In some countries it is the car that is insured. In other countries it is the person that is insured. In the UK it is an individual that is insured on an individual car. 

We have needed to have a basic level of car insurance since the Road Traffic Act 1930 came into play. Now there are three levels of insurance that you can choose from and it depends on your own personal circumstance which one is right for you. Many motorists who drive regularly opt for the highest level of cover known as comprehensive but there may be times where this is not the right option for you. 

The basic level of cover that you need to legally drive is third party. Although many people think that this basic level of insurance would be cheaper, however this isn’t always the case.

What is covered by a comprehensive car insurance policy?

Comprehensive insurance offers you full coverage meaning that if you were to make a claim against your insurance the following would be covered. 

  • Damage to your own car.
  • Injuries that you or your passengers sustained. 
  • Damage caused to another person’s vehicle or property. 
  • Injuries sustained to someone else. 
  • Fire Damage.
  • Theft.
  • Chips and scratches to the body work. 
  • Malicious damage.
  • Accidental damage. 

When you set up your policy you will be informed of the compulsory excess and also asked what you would like your voluntary excess to be set at. Generally the higher your voluntary excess is the lower your premiums are. 

So why might you not need this high level of coverage? 

  • If the value of the car is less than your excess.

Let’s say it is your first car. It’s a twenty two year old runabout that you bought for £200 knowing that it was your first car and most drivers will have a little bump or hit a fence post in their first two years of driving. Your compulsory excess is £250 and your voluntary excess is £200. You have a minor accident in your car, everyone is okay, but the car is a bit beaten up. Now, do you want to pay out £450 in excess knowing that the car isn’t worth half of that amount, or would you rather scrap the car and move onto a newer car now that you’ve got that first bump out of the way?

Of course not everyone will have an accident in their first few years of driving, but it makes sense if you have a brand new car to have comprehensive insurance. Especially if you saved up to buy it and you plan on keeping it for many years. The car will likely be worth much more than the excess you will have to pay out to your insurance company in the result of an accident. 

  • Low Mileage.

Another reason someone may not want to have comprehensive car insurance is when the amount of yearly mileage doesn’t warrant the highest level of coverage. When the risk is mitigated by the lack of total mileage, comprehensive insurance may not be financially worth it. For example, someone who only takes their car out once a week to pop to the local shops is less likely to have an accident than someone who commutes to work everyday.

What are your other options besides comprehensive insurance?

If you decide comprehensive insurance isn’t right for you then you have two other options. 

The basic level of cover that you need to legally drive is third party. Although many people think that this basic level of insurance would be cheaper, however this isn’t always the case.

Most insurers recognise that higher risk drivers tend to take out third party insurance so often comprehensive cover works out cheaper. 

Third party  

Third party does not cover damage to your car or injury to yourself 

It does cover – 

  • Damage to someone else’s vehicle or property. 
  • Injury to someone else.
  • Injury to your passengers. 

Third Party – Fire & Theft

This is very similar to third party and although in the event of an accident you are still unable to claim for damages to your own car you are able to claim for the following

  • Damage to someone else’s vehicle or property. 
  • Injury to someone else. 
  • Injury to your passengers.
  • Theft of you car*
  • Fire – either accidental or arson*

*There will be a voluntary and compulsory excess attached to these.  

How to choose the right coverage?

There are lots of price comparison websites online where you will be able to compare the costs of all three levels of coverage. By looking at these and seeing what the excess would be and the cost of your premium, you will be able to take into account the value of your car and will be able to decide which level of cover suits your circumstances best. 

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